Public lecture: Germany’s energy transition and its implications for Australia

With the energy transition or Energiewende, the Germany government aims to secure a “reliable, economically viable and environmentally sound energy supply”. The goal is to reduce carbon dioxide emissions by 80% in 2050 compared to 1990 and by 40% in 2020, while phasing out nuclear energy. This is to be achieved by increasing renewable energy to 60% of total energy supply by mid-century, and by drastically reducing total energy consumption.

Achieving these ambitious goals could have significant economic and social costs, and poses challenges for policy design and practical implementation. Many of these are of relevance to Australia’s efforts to reduce greenhouse gas emissions and transition in Australia’s energy system, and especially the current policy debate over renewable energy.

For example in energy supply, Germany’s support for renewables through long-term feed-in tariffs is effective, but not efficient; while within the fossil fuel sector, there could be emissions-saving substitution from brown coal to black coal and from black coal to gas, but the prices in the EU emissions trading scheme are not high enough for either. In energy efficiency, large gains were made since the early 1990s but in recent years annual improvements were at only half the rate required to achieve the targets. Energy prices have risen, but per-unit energy costs in Germany’s industry has remained constant due to rising productivity. Germany’s industrial energy costs remain competitive and there is no structural shift away from energy-intensive industries. Overall costs of the energy transition remain manageable including for industry, but it is unclear to what extent consumers will accept rising energy prices on account of environmental objectives. To succeed, the Energiewende will need clearer priorities and a hierarchy of the many separate goals.

Bio

Professor Andreas Löschel holds a chair for Energy and Resource Economics at the University of Münster and is Director of the Centre of Applied Economic Research Münster (CAWM) since 2014. Since 2011, he chairs the Energy Expert Commission of the German Government to monitor the energy transformation. He is also a member of the Board of Trustees of the research project „Energy systems of the future“ of the German Academies of Sciences and of the “Research Plattform Energiewende“ at the Federal Ministry of Education and Research (BMBF). He served as Lead Author in the Working Group III contribution to the IPCC Fifth Assessment Report (2010-2014). He was visiting scholar at the Massachusetts Institute of Technology (MIT) (2003), Stanford University (2005), ANU (2010, 2011) and Tsinghua University Beijing (2013). Andreas Löschel studied economics at the University of Erlangen-Nuremberg, Wayne State University and UCLA. He obtained his PhD from the University of Mannheim (2003) and his Habilitation (university teaching credential) in Economics from the University of Oldenburg (2009). 2007-2014 he was head of the department “Environmental and Resource Economics” at the Centre for European Economic Research (ZEW) in Mannheim and since 2010 Professor of Economics at the University of Heidelberg. His research interests are in applied microeconomics, energy economics and the economics of climate change. Andreas Löschel advised the European Commission, the European Parliament, the OECD, the World Bank and national ministries in Germany and the UK on environmental, energy and climate change issues. The Handelsblatt ranking of German speaking economists lists him consecutively among the Top-100 Economists under 40 (2007-2011). In the Ranking of Economists of the Frankfurter Allgemeine Zeitung (F.A.Z.), he is among the 25 most influential economists in Germany (2013-2014).

Acknowledgements

Prof Loeschel’s visit is arranged by the Centre for Climate Economics and Policy at ANU Crawford School of Public Policy, with funding from the German government.

His public lecture here at UNSW is supported by the University’s Centre for Energy and Environmental Markets, Australian Energy Research Institute and Climate Change Initiative